YouTube Debuts a New Subscription Service, YouTube Red

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YouTube introduces YouTube Red, a subscription service charging $9.99 a month for premium service. With the YouTube Red subscription, users are privileged to watch ad-free videos, to work across the original YouTube as well as Gaming app, YouTube Music and Google Play music service. More importantly, YouTube Red provides original shows and movies from YouTube creators, which are regarded as its edge creating customer stickiness.

Although YouTube still trumps all of video platforms in scale, competition is extremely fierce with companies like Facebook, where online video stars have other options to broadcast themselves. YouTube, as they said on announcement, focuses more on leveraging content assets from native stars than the distribution competition. YouTube Stars have huge social impacts and broad attractions. PewDiePie, the top earning YouTube Star with 40 million subscribers pulled in $12 million pretax last year by creating his own video and receiving sponsors from advertisers.

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PewDiePie is a Swedish YouTube star whose real name is Felix Kjellberg. Photograph: New York Times

YouTube Red is introduced as a new revenue stream to the Internet-famous creators. There will be a two-tiered system where some fans stay on original YouTube and others pay for extra content. For example, “Scare PewDiePie” , a new production in subscription service staring PewDiePie, is a reality series made by Maker Studios and the producers of “The Walking Dead”. YouTube Red brings new productions cooperating with YouTube Stars and media companies, which leverages YouTube Stars’ social impact.

Concerns remain about the success of YouTube Red since the core audiences, teenagers, are not willing to pay for the premium service. However, the author points out that the feeling of intimacy that YouTube delivers to its audience keeps strong and solid. According to Jeetendr Sehdev, celebrity brand strategist and professor of marketing at the Annenberg School of Communication, “From the standpoint of audiences that fans are so much more loyal and bonded to YouTube.”

My questions:

  1. After YouTube Red’s launching, original contents will be presented in two tiers. Do you think audiences are willing to pay for the original contents created by YouTube Stars? Will fans change their loyalty and bonding to YouTube?
  2. Apart from original productions staring YouTube Stars, YouTube Red will also include programming from big media companies like 21st Century Fox, NBCUniversal and Time Warner. Do you think YouTube Red can compete with other video services like Netflix, HBO.
  3. What do you think of the music offering by Youtube Red? Given that subscription revenue is split between music makers and YouTubers, each stand will get paid less. How Google Play Music rights holders will be impacted?

Articles Links:

YouTube’s New Subscription Service Bets Big on its Stars http://www.wired.com/2015/10/youtube-red/#slide-2

YouTube Introduces YouTube Red, a Subscription Service http://www.nytimes.com/2015/10/22/technology/youtube-introduces-youtube-red-a-subscription-service.html?ref=media&_r=0

The World’s Highest-Paid YouTube Stars 2015 http://www.forbes.com/sites/maddieberg/2015/10/14/the-worlds-highest-paid-youtube-stars-2015/

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2 thoughts on “YouTube Debuts a New Subscription Service, YouTube Red

  1. I believe there would be an audience willing to pay, since YouTube is such a massive force and the cachet of some of their stars is quite significant. As they say, though, teenagers and other less financially capable people will likely not be able to make that contribution.

    As far as original content, I feel like YouTube will not initially compete with the quality of programming of Netflix and HBO Go, as they offer less traditional and shorter videos, but that’s not to say they can’t cultivate their niche and explore it as a complement to, rather than a substitute for, those services.

    I would be curious to see a more detailed breakout of the revenue streams. If a YouTube Red subscription is equivalent to a Google Music membership, I feel like that is just another medium through which the musicians can have their music heard and they’d (ideally) see a proportional piece of the revenues as a ratio to views. Admittedly I am unfamiliar with this setup, so I could be totally wrong on how that works, but I feel like the partnership is designed to enhance the appeal of each service and the musicians would benefit, rather than be hindered, by the pairing.

  2. Not sure what the success of this will be, but I think it could be the start of growing their pay service. May need to work on the name a little, not sure how much that will resonate

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